A frustrated Perth businessman has been left nearly $200,000 out of pocket after becoming the innocent victim of international sanctions imposed on Russian entities over the invasion of Ukraine.
Mel King, of Welshpool-based Minspec, has a long standing business relationship with Russia’s Nordgold to supply its Bissa gold mine in Burkina Faso with mineral processing equipment.
But payments from Nordgold totalling $188,000 have been blocked from being paid into Minspec’s ANZ account because of sanctions against Russia imposed by the United States.
Nordgold represents one of Minspec’s biggest customers, with the company supplying the miner with equipment since 2007 in what Mr King says has been a healthy business relationship.
Mr King said he had received more orders for mining equipment from Nordgold since sanctions were introduced but couldn’t fulfil them unless he was paid.
“They’re trying to penalise the Russians but the Russians are laughing because they don’t have to pay anybody,” he said.
Mr King said the non-payment was also affecting the ability of Minspec to pay its suppliers, meaning the blocked payments were having a knock-on effect on other local businesses.
Nordgold is owned by Russian steel giant Severstal, which is in turn controlled by Russian oligarch Alexey Modashov, who is a person listed for targeted financial sanctions and travel bans under Australian law.
But The West Australian understands it is US-imposed sanctions that is preventing ANZ from accepting payments from Nordgold as incoming transactions from Russia received by an Australian bank do not need to be frozen or rejected under Australian sanctions law.
Australian banks need to comply not only with Australian sanctions law but also those of other jurisdictions including the UK and the US.
An ANZ spokeswoman said the bank was continuing to comply with sanctions imposed by the Australian Government and international regulators announced earlier this year.
She said the bank did not comment on the specific details of its customers.
Nordgold has suggested Minspec set up a business entity and bank account in Burkina Faso, into which it could deposit payments, as a way around the sanctions.
But Mr King said such an arrangement would eat into his margins and he believed he shouldn’t need to go to such lengths.
“I am sure we are not the only company in this situation,” he said.
Individuals and companies can apply for a permit from the office of Foreign Minister Penny Wong to conduct activities that would otherwise be prohibited by Australian sanctions law.
They can also ask the Australian Sanctions Office for an indicative assessment, whereby it will provide a “no-prohibition letter” where the activity is not sanctioned under Australian law.
However The West Australian understands some banks have still not enabled the transactions based on their own commercial decisions.
And it wouldn’t help Mr King because ANZ’s blocking of payments relates to US sanctions.